How South African Insolvency Practitioners Help You Through Sequestration

The first thing to do if you consider voluntary sequestration is to speak to South African insolvency practitioners. There are many pitfalls to avoid before, during, and after the process. South African insolvency practitioners can help you to minimise losses, ensure compliance with legal requirements, and assist with the rehabilitation process.

What you should not do is to approach creditors without the help of South African insolvency practitioners. You do not want to commit an act of insolvency without even realising it. When a creditor applies for compulsory sequestration of your estate, it is normally a hostile process. The appointed curator/trustee is less willing to negotiate on the buy-back of furniture and generally is not as favourable to you as when you apply for voluntary sequestration with the help of experienced South African insolvency practitioners.

 

What is the Voluntary Sequestration Procedure?

The insolvency practitioners publish a notice in the Government Gazette and the local newspapers to notify creditors of your intention to voluntary sequestrate. Under the South African insolvency law, this action also protects you against further legal actions against you. Such actions from creditors include notices regarding property seizures. What it boils down to is that creditors cannot bring judgments against you and cannot proceed with steps in foreclosure on property.

The South African insolvency practitioners draft the statement of debtor affairs. The statement lists your debts, and you must sign it in front of a Commissioner of Oaths. It is then inspected by the Master of the High Court. It can also be submitted to the local Magistrate. The South African insolvency practitioners work with you to ensure that the document is accurate as to prevent a creditor later on claiming that you have not included a particular debt.

The attorneys draft and send a registered letter to all the creditors to notify them about the voluntary sequestration. The creditors then have to communicate any issues with the South African insolvency practitioners. If they call you simply refer them to the attorneys. The attorneys also notify SARS regardless of whether you are a registered taxpayer or not.

They prepare a founding affidavit that states the details about your debt and personal circumstances, as well as how your debt situation developed.  An advocate presents your application to the High Court on your behalf. You do not have to attend the court proceedings.

If no objections are received and all requirements are met, the High Court grants the voluntary sequestration and a curator/trustee is appointed to oversee the sale of assets and distribution of benefits to the creditors. The curator/trustee contacts you for a meeting and to explain the details of the process. It can also be a telephonic consultation.

 

How Much Do You Pay?

You pay a percentage of the debt to the creditors. This percentage is dependent on several factors. Your assets are sold, and 20 cents out of the rand at minimum must go to the creditors. The creditors receive their benefits and the curator fees are paid from the sale of assets. It is possible that there can be a shortfall. In this instance, you enter into an agreement to pay off the amount over a period of 18-24 months without any interest accrual.

 

How is The Money Generated?

The attorneys forward a document that lists the items and properties identified as part of your asset profile. Such assets are described in detail. A valuator reviews the document and arranges for a visit to your home to establish the true value of the assets. The curator/trustee can present you with a purchase agreement in which you agree to buy back movable assets, such as furniture at the low auction value. This means no furniture is removed from your home.

 

Period of Sequestration

Unless you apply for rehabilitation with the help of South African insolvency practitioners, you stay sequestrated for a period of ten years after which you are automatically rehabilitated. However, it is not recommended to follow this route, as you cannot hold a director position during the period and require written approval from the curator/trustee to enter into credit agreements. It is thus best to apply for rehabilitation as soon as all requirements are met. This is also best discussed with our team of South African insolvency practitioners.

 


Disclaimer: This article is for informational purposes only and does not constitute legal advice. Call on our attorneys for legal advice, rather than relying on the information herein to make any decisions. The information is relevant to the date of publishing.

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